Russian Civil Shipbuilding Sector

Interview with the General Director of the Northern Shipyard

The online publication "Business Petersburg" under the headline "Head of the Northern Shipyard: "It's sad that we are late in modernizing our shipyards" published an interview with the General Director of PJSC "Shipbuilding Plant "Severnaya Verf" (part of JSC "United Shipbuilding Corporation") Igor Orlov. His statements in interviews, in particular, demonstrate the sad state and dim prospects of the modernization process of the Northern Shipyard.

The Northern Shipyard has perhaps the largest package of contracts in Russia for the construction of ships under the investment quota program. These are 10 processor trawlers and four longliners. Igor Orlov , General Director of PJSC Severnaya Verf Shipyard, spoke about the problems of the industry, legal disputes with European suppliers and the upcoming modernization of DP .


The Northern Shipyard, like others, faced difficulties in building civilian ships. What caused it?

— We overcame a huge number of difficulties at different stages. Everything came together: external factors, managerial ones, and many others. And the current situation with economic sanctions obviously affects shipyards more than investors in the fishing fleet.

At one time we made all possible mistakes: we started building “everything at once”, launching projects in a short time, having in hand a very small package of documents to get started. After all, the shipyard did not have working and design documentation for a single unit of the ships that it undertook to build. I left shipbuilding for some time (from 2012 to 2020 I was the governor of the Arkhangelsk region. - Ed.), and when I returned, I was faced with a new concept - “design documentation of a vessel under construction”, or, in short, PDSP. I cannot explain how it was possible to sign a contract for the construction of a series of ships based on it, without being able to return to the cost estimate later.

According to all the documents that exist today, any deviation from the PDSP must be agreed upon with the customer. Moreover, changes can only be made to it through a customer agreement with Rosregister. And besides, he often “holds back” some of these changes and “does not let” them into the register, having additional leverage over me. But I cannot present the vessel to the register, since these changes were not carried out through the PDSP. Here are the figures for the longliner: the delay in the release of documentation since the start of construction is one and a half years. The number of changes made to the PDSP is more than 600. Plus, the level of equipment replacement during the construction process in the engine room of this small vessel is more than 30%.

I remember well that when I worked with complex projects at Zvezdochka, the contract took 200–250 pages, plus the annexes were about 600 pages. Now the contract for the construction of one of the vessels for fishermen is 46 pages long, including appendices.

You can talk about our shipbuilding as much as you want, criticize it - and, of course, justifiably - but, trying to participate in this investment project and solve an important state problem, we need to find a solution to this interweaving of intractable problems. Yes, the ships are surrendering, but this is not thanks to, but in spite of.

Many customers say that in Turkey trawlers are built faster and for the money that is agreed upon in advance.

- They are lying. The customer’s Turks do not allow any decision on the project: if we place an order, you will come for the vessel. With us, the customer signs each construction certificate, at the same time adding his “wants” to it. This is how contracts are drawn up: they are generally interpreted in favor of the customer in everything. But in defense of the former head of the Northern Shipyard, I want to say that he signed them in conditions when he had nothing to pay people’s salaries. This story has been going on in shipbuilding since the 1990s: if I don’t “snatch” the contract now, then there will be nothing to pay with.

We have long cycles - 3-5 years, and for different types of production, which are busy at different stages of construction. That is, the plant director must, while one ship is being completed, begin a new one. I would like to note that the margin in shipbuilding is on average 3%. And with one such vessel it turns out: a respected Norwegian designer schematically indicated the engine room, but 30% of what he placed there does not fit - a design error.

I already have three longliner hulls ready with the same problem. The redesign of the engine room began - and this is the worst thing that can happen in shipbuilding: relocation of the platform, engines, routing of all pipes on all ships at the same time.

How did your European partners behave when sanctions were announced?

— One could assume anything, but when more than 10 million euros were paid for the supply of various equipment in the form of advances and conversations simply stopped... We tried to establish a dialogue, find an opportunity to pay for some other work with this money, but we saw the stone faces of our "partners" and reluctance to negotiate. They just turned away, that's all. Then, perhaps, I’ll write in my memoirs how, under sanctions, we handed over ships with foreign mooring and anchor devices that require the presence of chief engineers.

To be more precise, the Europeans owe us more than 12 million euros. Among the leaders is the Finnish Wärtsilä, which received huge funds. We have advanced the supply of three propulsion systems. In addition, I had already purchased 22 more of their installations, which required support: solving operational issues, software, correcting comments based on test results. They did not fulfill any obligations. But there is also a fish factory, and other equipment.

The "heirs" of the Europeans, who bought out their Russian "subsidiaries", could not help you?

“They have nothing to do with this, the supplies went through a Scandinavian legal entity. We offered them: there is your supplied equipment, for which we have not yet fully paid. Give the Russian organization the rest so that they can help us finish everything. No. Theft in its purest form - I simply have no other definition. We filed lawsuits in Russian courts, everything is as it should be. But the prospects are vague.

It was reported that the Norebo fishing group plans to take back part of its unfinished fishing trawlers from the Northern Shipyard. Is it so?

- Yes, they want to take it. We have signed an agreement for the construction of a series of 10 vessels, six of which are already afloat, and four we have not even fully deployed. Taking into account the modifications, each vessel was one third more expensive than stated in the contract. Attempts to index it were unsuccessful; the issue of state support is being resolved. Therefore, there is a delay in terms of timing and they decided not to build four trawlers at this stage.

Not to build at the Northern Shipyard?

— As they say, don’t build at all. Life will show. There is no mutual settlement of money here, so we will bear financial responsibility, which we do not refuse. We are in dialogue with the owner and the state: financially it is difficult, but not tragic.

At what stage is the construction of the new boathouse now?

— The contract with the third contractor has now been terminated; he was unable to confirm his qualification requirements: he did not provide bank guarantees. Here the question is even about the project as a whole: it had a lot of imported equipment, including air conditioning systems, power supply, ventilation and electrical supply. The former management of the United Shipbuilding Corporation (USC, which includes the Northern Shipyard - Ed.) believed that it was possible to resolve some issues during the completion process. There was a possibility that the contractor could redesign during construction. But the banks said: given that the price is obviously higher, we will not give a bank guarantee. None of the first-tier banks agreed to guarantee this project, so it did not work out.

The boathouse is our pain. There is no need to talk about the future of the shipyard without him. Plus a lot has already been spent to have it. We are in extensive dialogue with the state as the main investor of this project in order to find resources for its implementation. We have found all solutions to replace imported ones. There are also high-status interested parties who want to join the project, but they are waiting for confirmed funding, which is not yet available. The facility is currently 38% complete: two spans of supports have been installed.

Is there any news on the Project 20385 corvette "Provorny"?

— The ship has been completely restored, painted, the composite superstructure has been reinstalled, and equipment is being actively installed. I think the launch will take place no later than May 2024, and in 2025 we can transfer it to the fleet if the customer does not make amendments.

What caused the fire is already known?

— The investigation is not finished yet. We expect that the case will soon go to trial with charges filed. During this process, the amount of damage and the responsibility of certain individuals and organizations will be determined. It was a serious tragedy. I can say that the composite from which the then-burnt superstructure was made is considered a non-combustible material. I assure you that this is not very much the plant’s fault: we are assemblers, we assemble in accordance with the rules and acted strictly according to the documents that were available at that moment. We have now finalized the standards for working with composite materials and the fire extinguishing system. Such experience is, unfortunately, given through such difficult events.

The amount of damage reported in the media was 22 billion rubles.

- It's a bullshit. In fact, 22 billion is closer to the cost of almost the entire "Agile". The numbers that were spoken then were from the realm of, let’s say, deep incompetence. I can say that it is more than 10 times smaller.

Did Northern Shipyard end last year with losses?

- Yes, the shipyard is unprofitable because of the “fishermen”. The state plans to subsidize us for these losses. Once this happens, we will be able to return to some decent financial direction.

Do you agree with the assessment of the head of VTB about the problems of USC, which includes the Northern Shipyard?

— It seems to me that from the point of view of express analysis, VTB President Andrei Kostin said everything correctly: management errors, errors in concluded contracts, lack of industry development in accordance with modern requirements. I remember the largest Chinese shipyards a decade and a half ago with manual and primitive labor. It is very sad that we are so late in modernizing our shipyards. I hope that the colleagues who took on this will be able to implement it.

Do you mean building a boathouse?

— The construction of a boathouse will not solve all problems. We will complete it and get 30 thousand tons per year at the output, but at the input I will still only have 7 thousand. Of course, the question of modernizing the rest of the chain arises. We presented the concept, and it was approved at the USC level; the question is about its implementation. The total investment volume is about 100 billion rubles. Compared to how much is invested in related high-tech industries, this is not the most money. Kostin said that USC needs to invest from 500 billion to 1 trillion. I think this is a reasonable estimate.

What will change then?

— There will be an ultra-modern Northern Shipyard, capable of building facilities in the interests of any customer. We have already refused several orders: my dock width is 25 m, the length is up to 140 m, which is very short. The same modern bulk carriers today have a length of 180 m. The country needs at least a hundred of them - and this is only one of the niches. In the new boathouse we will even be able to build “Afromaxes” if necessary.

Is this a quick process?

— We have planned three stages of modernization. The first one is coming now. If we “parallel” financial resources.

https://bmpd.livejournal.com/4763168.html

Hole wrote:Too much behaving like a neo-liberal market economy. Even some state-owned companies behaved like this.
One tender after the other. Companies telling fantasty numbers and get broke because the real construction costs were much higher and so on.

Well possibly it will be a good wake up call.

And I believe that in this case the state need to invest and proper develop and manage one or two companies with capacity and capabilities for building and expanding shipyards and port structures. It has been clearly shown that it is not a job that can be assigned to any classical civil engineering construction firm.

Putin announced plans to develop the Russian nuclear icebreaker fleet,12.18.2023.

Russia has big plans to develop its nuclear icebreaker fleet. Russian President Vladimir Putin announced this on December 18 at a meeting with the winners and mentors of the championship of professional excellence.

“No one in the world has such ships. Russia is the only country in the world that has such a nuclear icebreaker fleet. We have big plans here,” he said.

He noted that in the near future a nuclear-powered icebreaker “Leader” will be created, which will be able to break ice 6–7 m high. This will allow the development of the Northern Sea Route (NSR), the president emphasized.

“This is a separate page in the history of the fleet. This will help expand the capabilities of the Northern Sea Route. Due to climate change, it is already opening for quite a long time,” Putin said.

Earlier, on November 27, the Chairman of the Board of Directors of the United Shipbuilding Corporation (USC), the head of VTB, Andrey Kostin, said that a serious modernization of the shipbuilding industry will be required to satisfy the entire order for civil vessels. According to him, there are now a lot of orders for all types of ships. But it is not possible to fully satisfy the order, since there is not enough capacity and technology.

On September 19, Deputy Head of the Ministry of Industry and Trade Viktor Evtukhov announced the need to build a flotilla of ships for the Northern Sea Route. He noted the great need for the production of new military rescue ships, supply ships and ice-class cargo ships.

https://iz.ru/1622472/2023-12-18/putin-zaiavil-o-planakh-razvitiia-atomnogo-ledokolnogo-flota-rossii

The scientific expedition vessel "Ivan Frolov" of project 23680 was laid down

https://bmpd.livejournal.com/4870671.html

Is there any construction work already visible on Kotlin Island regarding the new large shipyard cluster that is to be built?